Anglo Platinum launches $1.6bn rights issue in an effort to pay down its debts

Mining bellwether Anglo Platinum said it would pay off most of its debt via a $1.6bn (£1.02bn) rights issue backed by its owner, and forecast its markets would turn around in 2010.

Angloplat, which supplies close to half the world’s platinum, announced the discounted cash call yesterday together with sharply weaker full year earnings in line with its guidance, and said demand for the metal -- which closely tracks production cycles in the auto industry -- would grow this year.

Majority owner Anglo American backed the rights issue, which Angloplat had flagged last year, boosting sentiment in the South Africa-listed firm.

“People have been expecting the rights issue, and even though it is deeply discounted, it broadly means the company will be less of a risky investment now,” Barend Ritter, a platinum analyst at Sanlam Investment Management, said.

The firm, which said last year it was considering a cash call to ease debt that ballooned following the global economic downturn, plans to issue close to 25m new shares at a discounted 502.18 rand each. The 12.5bn rand raised would cut net debt to 6.8bn, it said.

Anglo American, which owns about 80 per cent of Angloplat, said it would subscribe in full to its entitlement and underwrite the minority portion of the offer, whose proceeds would also settle Angloplat’s debt with Anglo.